Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83590
Authors: 
Jakab, Zoltán M.
Várpalotai, Viktor
Vonnák, Balázs
Year of Publication: 
2006
Series/Report no.: 
MNB Working Papers 2006/4
Abstract: 
This paper assesses the effect of monetary policy on major components of aggregate demand. We use three different macromodels, all estimated on Hungarian data of the past 10 years. All three models indicated that after an unexpected monetary policy tightening investments decrease quickly. The response of consumption is more ambiguous, but it is most likely to increase for several years, which may be explained by the slow adjustment of nominal wages. On the other hand, we could not detect any significant change in net exports during the first couple of years after the shock. The weak response of net exports can be due to the fact that the drop in exports is coupled with a fall in imports of almost the same magnitude, highlighting the relative importance of the income-absorption effect, as opposed to the expenditure-switching effect.
Subjects: 
monetary transmission mechanism
macromodels
VAR
impulse responses
JEL: 
E20
E27
E52
Document Type: 
Working Paper

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